Five Takeaways From Ray Dalio’s Portfolio

Five Takeaways From Ray Dalio’s Portfolio

by Ras Vasilisin
6. October 2020
Five Takeaways From Ray Dalio’s Portfolio

During my twenty years in investing, I made virtually every mistake I could.

But I’m always trying to improve and use those mistakes as an opportunity to learn. 

And as I’m trying to learn, one of the main strategies that I use is to follow the smart money and see what the world’s legendary investors are doing. 

The way I see it, these people made more money than god, and there is always a thing or two I can learn from them. 

Recently, I wrote about how Warren Buffett surprised markets by buying gold. This time I got some revelations from Ray Dalio.  

For those not familiar with Ray Dalio, he is the founder of Bridgewater Associates, the world’s largest hedge fund.

Dalio is the real deal. When he talks, you can bet the smartest people in the world are listening. 

So I got some insights into his latest filings, and here are my five key takeaways:

1. Big Fan of ETFs

The first takeaway is that Bridgewater is well diversified and invests in multiple exchange-traded funds (ETFs)

ETFs are a type of mutual fund. They are pooled investment vehicles that offer diversified exposure to a particular area of the market.

Bridgewater’s $5.96 billion equity portfolio contains 382 positions, and over 80% of the portfolio constitutes ETF holdings. 

Make no mistake. Dalio is a big fan of ETFs. 

2. Dumping Dollars

Bridgewater almost eliminated its iShares 20+ Year Treasury Bond ETF (TLT) holding. This ETF seeks to track U.S. Treasury bonds with maturities of over 20 years. 

Dalio’s team sold 1,692,081 shares of the ETF, reducing the equity portfolio by 5.54%. 

Dalio dumping dollars is no surprise. He has been outspoken about it when he said that “cash is trash.”

Dalio thinks that the next few years will bring the largest debasement of fiat currency that we know. 

3. Bullish on Gold

So, what does Dalio say you should do with your money instead?

You guessed it.

He believes that every investor should buy some gold

Bridgewater purchased 1,405,915 shares of the SPDR Gold Trust ETF (GLD), increasing their position by 34.66%. 

In 1996, Dalio created “The All-Weather Portfolio,” which could perform well regardless of the market conditions. In that portfolio, he allocated less than 7% in gold. 

He allocated over 20% in gold in the current portfolio, almost three times his initial stake. 

So, saying that Dalio is bullish on gold a bit of an understatement. 

4. Heavy bet on China

Dalio is taking a relatively heavy bet on China. 

Bridgewater purchased 4,192,642 shares of the iShares China Large-Cap (FXI), increasing the position by 717.54%. 

But that’s not all. 

Bridgewater also purchased additional ETF focused on China. His team bought 1,906,526 shares of iShares MSCI China (MCHI) and upped the position by 486.89%. Similarly, Bridgewater purchased 672,442 shares of Alibaba (BABA), increasing the holdings by 241.75%. 

So in case you missed it, Dalio is bullish on China. 

He suggested that investing in China is now comparable to Britan in the industrial revolution.

5. Boosting stake in US Equities 

I know what you’re thinking.  Dalio is ditching the USA for China. 

Here is the main issue with that assumption. 

Bridgewater boosted its position in SPDR S&P 500 ETF (SPY) by 41%. SPY is now the single largest position in the portfolio, with 26.1% allocation. 

It gets better.

His third-largest position is another S&P 500 ETF, iShares Core S&P 500 ETF (IVV). This ETF is similarly tracking US’s 500 largest companies and represents about 9% of the portfolio. 

His number first and third-largest holdings are the US stock market tracking ETFs, totaling 35.1% of his holdings. 

Dalio strongly suggests being invested in stocks right now as the conditions are set for them to rally way past the previous all-time highs.

So what is the main takeaway for investors?

Here is the big secret. Look at Dalio’s largest holdings.

As you can see, they all revolve around the US stocks, gold, and China. 

Final point.

It is undeniable that Dalio and this team realized that the times have changed. 

Ray Dalio is a straight-up cool guy. He meditates, produces viral videos, dedicates much of his time to educating others, and runs his fund in a silicon valley business culture. 

Perhaps, we shouldn’t be surprised when we see him buying Bitcoin next year. 

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